Case study: Salesforce.com's outsourced CRM saves bank big bucks

For investment bank Putnam Lovell, the math spoke for itself when it came to customer relationship management. In December 1999, the company was considering buying and installing in-house either Onyx Software Corp.

But with those customized services came some serious costs. To roll out Siebel alone would have cost around $1.5 million, estimates Rodric O'Connor, the bank's vice president of technology. Onyx, he said, would have cost roughly $500,000 initially. The company would also need a database administrator to do regular maintenance at a minimum cost of $100,000 a year. "And you'd probably have to continue to throw hardware at it," says Ken Kwan, the bank's senior systems administrator.

The company then looked at various ASPs, such as UpShot, which would be cheaper. But Salesforce.com in particular was willing to customize its service for the banking market. "Salesforce.com was willing to do this because they wanted more clients in the space," Kwan says .

Salesforce.com's service would shield confidential documents from unauthorized employees. The research department, for example, legally could not be privy to work being done by the investment banking department

Not only would Salesforce.com customize its product, but it would also charge Putnam Lovell only $100,000 a year, after roughly $10,000 in startup costs. That was too good a deal to pass up, so the bank signed up in May 2000. "We lost some of the bells and whistles that we would get from doing it in-house, but they were by no means necessary," O'Connor says.